Asia morning update - Eurozone, US data disappoints
Tracking weaker economic indicators overnight, Asia markets are set to see dips across the region. Amid the question on whether momentum has started to fade, the market also awaits the conclusions from the US-China trade talks.
With the release of a string of weaker-than-expected data overnight, the market appears to again be questioning the current recovery rally. December’s durable goods, an interpretation of business investments, arrived weaker than expected at 1.20% month-on-month, once again showing further signs of the uncertainties impacting businesses. This was flanked by disappointments in Markit manufacturing PMIs across the eurozone and the US, the former sliding into contraction territory for the first time since mid-2013. EUR/USD, however, showing little changes from yesterday, still oscillating $1.1340 as we pen this.
It had not helped with several earnings disappointment and US markets meeting key resistances. The S&P 500 index notably seeing rejection ahead of the 2800 handle as prices threatens to enter overbought territory. Likewise on the Dow, prices had reversed ahead of the 26,000 level awaiting the next trigger. Into the end of the week, all eyes are set again on the US-China trade talk conclusion from Washington. The base case scenario would be an announcement for an extension to the March 1 deadline for tariffs implementation, or at least the suggestion of which, which may have all been fully priced in at this point of time. Until further breakthroughs are seen, trading the range may be the way to go.
Asia markets are set for broad declines into the Friday session, with the abovementioned weakness in data one to undermine sentiment. On the pertinent US-China trade issue, reports that the two sides have been outlining commitment in principles for a deal marks the progress seen, though scepticism as to how prolonged the process could sustain curbed the enthusiasm. The holiday delayed EIA report in the US also provided another high frequency update on rising crude inventory as output struck a 12 million barrel per day record, one to batter energy stocks in the region with the lower crude prices.
Early morning release saw Japan’s January inflation hitting bull’s eye with core CPI at 0.80% year-on-year, accelerating slightly from 0.70% in December. No prominent reaction seen in USD/JPY as expected, one still trading against the backdrop of BoJ’s dovishness.
Separately, this morning saw OCBC and UOB earnings arriving mixed. While UOB delivered largely in line with consensus, OCBC ‘s profit was noted to be down 11% from a year ago, casting a drag on the local STI.
Yesterday: S&P 500 -0.35%; DJIA -0.40%; DAX +0.19%; FTSE -0.85%
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 30
- The only provider to offer 24-hour pricing
Live prices on most popular markets